Revisions to Committee Regulations; Final Rule COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED

SUMMARY: This final rule updates the regulations of the Committee for

Purchase From People Who Are Blind or Severely Disabled to reflect

developments and changes in Committee procedures which have occurred

since the regulations were last substantively revised in 1991, and to

include wording changes that were overlooked in that revision. The new

revisions were made necessary by changes in the Government procurement

process, of which the Committee's program is a part, and by the

Committee's experiences since 1991, including litigation, which have

demonstrated that the regulations do not always clearly reflect the

authorities given the Committee by the Javits-Wagner-O'Day (JWOD) Act

and other laws as implemented in its procedures. The rule will enable

the JWOD Program to operate more efficiently to fulfill the Committee's

mission of increasing employment opportunities for people with severe

disabilities through the Government procurement process.

EFFECTIVE DATE: December 16, 1994.

ADDRESSES: Committee for Purchase From People Who Are Blind or Severely

Disabled, Crystal Square 3, Suite 403, 1735 Jefferson Davis Highway,

Arlington, Virginia 22202-3461.

FOR FURTHER INFORMATION CONTACT: G. John Heyer (703) 603-7740. Copies

of this notice will be made available on request in Wordperfect 5.1

format on diskette.

SUPPLEMENTARY INFORMATION: The Committee's regulations were last

substantively amended in 1991 (56 FR 48974, effective October 28,

1991). Those amendments were the result of the first comprehensive

review of the regulations since their promulgation in 1973. The purpose

of the current revision to the regulations is to update them to reflect

developments and changes in procedures since 1991, and to include

changes that were overlooked in the last revision.

Among the changes to part 51-2 on Committee responsibilities,

Sec. 51-2.2(b) has been amended to make clear that the Committee

authorizes and deauthorizes both central nonprofit agencies and

nonprofit agencies employing people who are blind or have other severe

disabilities to accept orders from Government agencies under the

Committee's program. Section 51-2.3 is amended to indicate that the

Committee publishes notices of proposed deletions and additions to the

Procurement List and to require interested persons who submit bound

comments on these proposals to also submit an unbound copy to be

duplicated for staff use.

Sections 51-2.4, 51-2.7, and 51-3.2 have been amended to make them

consistent with the JWOD Act, which considers a determination that a

commodity or service is suitable for addition to the Procurement List

and the establishment of an initial fair market price for the commodity

or service to be two legally separate actions. The confusing term

``current or most recent contractor'' in Sec. 51-2.4 has been changed

to ``current contractor.'' An explanation of those rare instances when

``current contractor'' means ``most recent contractor'' will be

addressed in the Committee's procedural memoranda. The Committee's

position that the ``current contractor'' includes affiliated companies

and parent corporations is explicitly stated in the amended Sec. 51-

2.4. A provision has been added to Sec. 51-2.4 to express the

Committee's position that its discretion to determine what commodities

and services are suitable for addition to the Procurement List is not

totally constrained by the enumerated criteria in the section. Section

51-2.7 has also been rewritten to reflect current Committee pricing

practices.

Section 51-2.5 has been amended to make clear that when the

Committee decides that a proposed addition is likely to have a severe

adverse impact on a current contractor, it will decide either to reduce

the portion of the Government requirement for the commodity or service

to be added to the Procurement List or will decline to add it. The

Committee's standard for reconsidering a decision to add a commodity or

service to the Procurement List, which appears in an internal

memorandum, has been added to Sec. 51-2.6.

Section 51-3.3, which deals with assignment of a commodity or

service to a central nonprofit agency for possible addition to the

Procurement List, and Secs. 51-6.4 and 51-6.12, which deal with

military resale commodities and specification changes respectively,

have been rewritten to clarify their language. Small editorial changes

for clarity have been made in Secs. 51-4.2 and 51-5.2. Recordkeeping

provisions in Sec. 51-4.3 have been changed to permit acceptance of

State certifications of disability to document individuals' disability

status in accordance with recent changes in Federal disability

regulations. The section title ``Violations'' used for both Secs. 51-

4.5 and 51-5.8 has been changed to indicate that the former applies to

violations of Committee regulations by nonprofit agencies and the

latter to violations by entities of the Government.

Section 51-5.3, which sets forth the scope of the mandatory

procurement source requirement of the JWOD Program, has been amended to

indicate that the requirement applies to items that are essentially the

same as commodities identified on the Procurement List by a National

Stock Number or other item designation. This change was made necessary

by the increasing number of commercial items in the system which are

essentially the same as Procurement List commodities. A similar change

was made in Sec. 51-6.13 on replacement and similar commodities. A new

paragraph was added to Sec. 51-5.3 to set forth the Committee's

longstanding policy that Procurement List additions do not affect

contracts in being before the effective date of the addition, or

options exercised under those contracts.

The minimum figure for prior Committee approval of purchase

exceptions granted by central nonprofit agencies in Sec. 51-5.4 has

been raised from $25,000 to the simplified acquisition threshold

established by the Federal Acquisition Streamlining Act of 1994,

currently $100,000. Sections 51-5.5 and 51-5.6 on prices and shipping

of commodities have been amended to allow for pricing and delivery on

an FOB destination basis, consistent with recent developments in

Government ordering procedures, as well as the Committee's traditional

FOB origin practice.

Section 51-6.2 has been amended in paragraph (f) to correct an

undetected typographical error in the 1991 amendments. Section 51-6.8

on deletions from the Procurement List has been amended by adding a

paragraph making it clear that the Committee can delete a commodity or

service from the Procurement List without a request from a central

nonprofit agency. A new paragraph has been added to Sec. 51-6.12 on

specification changes to indicate that nonprofit agencies are to

recommend changes that will improve the commodity or service being

provided, reduce costs, or improve overall value to the Government. The

paragraph also requires contracting activities to respond promptly to

the recommendations. Section 51-6.13 has been amended to clarify its

language and to indicate that other colors, sizes, or variations of

commodities on the Procurement List which have not been recently

procured are considered to be on the Procurement List as well.

Section 51-8.3, consisting of definitions applicable only to part

51-8 on Committee actions under the Freedom of Information Act (FOIA),

has been amended by removing the definition of the Committee, which

also appears in the general definitions for the Committee's regulations

at Sec. 51-1.3, and by changing the title ``Chairman'' to

``Chairperson'' as the title of the Committee's presiding officer. The

same change to ``Chairperson'' has also been made in Secs. 51-8.7, 51-

8.10, 51-8.11 and 51-9.405.

Changes have been made to Secs. 51-8.1 and 51-8.4 and to paragraph

(a) of Sec. 51-8.5 to make clear the distinction between material which

the Committee is required to make available for public inspection and

material which the Committee provides in response to a FOIA request.

The provision in Sec. 51-8.14 for a minimum amount for FOIA processing

costs below which no fee will be charged has been qualified to indicate

that the minimum will apply to each Committee response to a FOIA

request where it is necessary to make more than one response to a

request. The Committee bills FOIA requesters separately for each

response, which requires a decision each time as to whether the cost of

collection would exceed the amount billed.

Public Comments on the Proposed Rule

The Committee published the proposed rule in the Federal Register

of July 27, 1994 (59 FR 38318). Eighteen commenters submitted comments

on the proposed rule. Thirteen of these commenters supported the rule

as proposed, and were particularly supportive of the proposed changes

to Secs. 51-2.4, 51-2.7, and 51-3.2 to make them consistent with the

JWOD Act distinctions between suitability and fair market price

determinations.

One commenter suggested that Sec. 51-2.3 on notice of proposed

Procurement List additions and deletions be amended to require actual

notice to current contractors for the commodities or services being

considered, and to require the Committee to publish notice of the

proposal in the Commerce Business Daily as well as the Federal

Register, in order to provide wider notice of the Committee's

proposals. The Committee has considered this suggestion in the past.

However, the Committee has concluded that the benefits which adopting

this suggestion might provide are outweighed by the considerable

administrative burden which would be imposed on the Committee's small

staff. The Committee already writes to current contractors when it is

unable to obtain sales data on them from a financial reporting service,

and experience has shown that some contractors do not respond and those

who do rarely provide persuasive comments with their responses. In many

cases, Government contracting activities, trade associations, or other

persons are already notifying current contractors and other affected

parties of the Committee's intentions. Under these circumstances, the

Committee does not consider it appropriate to extend its notice of

proposed actions beyond that which is mandated by law.

The same commenter also suggested that the employment potential

requirement for a Committee determination that a commodity or service

is suitable for addition to the Procurement List, at newly redesignated

Sec. 51-2.4(a)(1), be changed to require the addition to generate

employment for a larger number of persons who are blind or have severe

disabilities than is performed by such employees of the current

contractor in connection with the commodity or service. The Committee

does not believe this change is necessary because it is already

required by law to consider and respond to all significant comments it

receives when it makes a Procurement List addition decision. It should

also be noted that the Committee's regulatory definition of persons

with severe disabilities (41 CFR 51-1.3) requires them to be incapable

of normal competitive employment over an extended period of time, a

test which employees of a competitive contractor could not meet.

This commenter also suggested that an additional factor be added to

those listed in newly redesignated Secs. 51-2.4(a)(4)(i)(A) through (C)

concerning elements of impact on a current contractor to which the

Committee gives particular attention in making a suitability

determination, to require the consideration of whether the contractor

has made an unrecovered capital or training investment in connection

with the commodity or service, and whether losing the contract will

cause idle productive capacity or unemployment in a labor surplus area.

The Committee believes this change is not needed because it already

considers any comments of this nature it receives as required by the

rulemaking statute. The Committee is also required by Sec. 51-

2.4(a)(4)(i)(C) to give particular attention to comments received on

contractor impact as a result of its notice proposing addition of the

commodity or service to the Procurement List.

Another commenter objected to the proposed addition to Sec. 51-

2.4(a)(4)(i)(A) of language indicating that the Committee looks at the

impact on a current contractor's total sales, including sales of

affiliated companies and parent corporations, in determining the

suitability of an addition to the Procurement List. The commenter felt

this position is unfair, as it can result in a heavy impact on a

corporate division. As indicated in the proposed rule, the Committee

believes that the new language is nothing more than a clarification of

its existing policy in this area, which it recently reaffirmed. Given

the ability of large corporations to shift assets between divisions,

the Committee does not believe it would be fair to the nonprofit

agencies participating in the Committee's program to assess impact on a

part of a large corporation in the same manner as a small independent

business.

This same commenter objected to new language in Sec. 51-2.5

concerning the addition to the Procurement List of a commodity or

service ``in whole or in part.'' The commenter felt that this language

would permit the Committee to extend the reach of a Procurement List

addition beyond a particular commodity into a larger line of

commodities. The Committee believes that the commenter misunderstood

the intent of the change, which was discussed in the proposed rule. The

Committee's intent was to clarify an existing provision which permits

the Committee, when it decides that a proposed addition to the

Procurement List of the total Government requirement for a commodity or

service is likely to have a severe adverse impact on a current

contractor, to add only a part of the requirement to lessen the impact

on the contractor. There is no intent in this language to permit the

expansion of the addition beyond what is specifically stated in the

final rule making a Procurement List addition.

Another commenter suggested that the phrase ``harm to the

contracting activity'' in Sec. 51-2.6(b) listing the factors the

Committee addresses when reconsidering a Procurement List addition

decision be changed to ``harm to the Government'' to allow

consideration of harm to ultimate Government users of items purchased

for them under the Committee's program by contracting activities. The

Committee agrees with the commenter and has amended Sec. 51-2.6(b)

accordingly.

The same commenter suggested that language in Sec. 51-2.7 requiring

the Committee to consider recommendations from contracting activities

in setting initial fair market prices not based on competitive bids be

broadened to permit contracting activity comments on all Committee

pricing determinations. The Committee does not agree with the

commenter. When initial fair market prices are established based on

bids, the process is an automatic one based on the bid history of the

commodity or service in question. There is no place for comments,

unlike the alternate process of setting prices based on nonprofit

agency costs, where a wider variety of information is allowable to

determine what these costs actually are. As the commenter noted, the

Committee has allowed contracting activities to make comments on

pricing determinations whenever appropriate, so a requirement to accept

these comments is not necessary. The Committee has modified the

sentence, however, to make it clear that the no-comment rule applies

only to initial fair market price determinations based on competitive

bids and not to price changes.

One commenter noted that Sec. 51-2.7 provides some detail on the

Committee's method of making initial fair market price determinations,

but very little on how price changes are determined, which is set forth

on Committee procedures. The Committee has modified Sec. 51-2.7 to

identify the price change methods used and to make reference to the

Committee procedures where the details are set forth.

The same commenter also suggested that Sec. 51-2.7 be amended to

prohibit the establishment of an initial fair market price that is more

than twenty percent above the existing Government price for the

commodity or service. Current Committee policy already prohibits such a

high price, so a change in the regulations is not necessary.

One commenter asked for clarification of the term ``other persons''

in a new sentence in Sec. 51-5.2(e) concerning ordering of Procurement

List commodities available only from nonprofit agencies. This term is

part of a phrase extending the mandatory source requirement applicable

to Government agencies to others providing the commodities to the

agencies by contract which already appears in Sec. 51-5.2(c) and (d),

and is only added to make it clear that the same requirement applies to

orders covered by Sec. 51-5.2(e) as well. While the Committee agrees

with the commenter that the term was originally intended to apply in

all three cases to commercial suppliers under contract to Government

agencies, the Committee believes that the broader language is justified

by the JWOD Act and is appropriate to address similar situations which

might not be covered by a more restrictive term.

Two commenters suggested that language added to Sec. 51-5.3(a) by

the proposed rule to extend the mandatory source requirement to

commodities ``essentially the same'' as those on the Procurement List

be deleted, along with new Sec. 51-6.13(c) which indicates that

contracting activities are not permitted to purchase commercial items

that are essentially the same as commodities on the Procurement List.

One of these commenters indicated that this language would allow the

Committee to add commodities to the Procurement List without performing

individual suitability evaluations. The other commenter objected to the

lack of a definition for ``essentially the same,'' and indicated that

the concept would make it difficult for contracting activities to

comply with the Administration policy and new statutory mandate to

acquire commercial products whenever possible.

As the proposed rule implied, this change was made necessary by the

recent threat of proliferation in the Government supply system of

commercial items which are essentially identical to commodities

produced under the JWOD Program. The purpose of the JWOD Act, to create

employment for persons who are blind or have other severe disabilities,

would be nullified if contracting activities could evade the JWOD Act's

mandate simply by purchasing items which differed from JWOD Program

commodities only in brand name or other insignificant features. The

Committee, which includes a number of leading Government procurement

officials, has carefully considered this change and has decided that it

is important for the JWOD Program and within the intent of the JWOD

Act.

The Committee does not intend to use this concept as a substitute

for individual evaluation of new commodities to determine their

suitability for addition to the Procurement List. The concept will be

used to identify commercial items which duplicate or differ only

marginally from Procurement List commodities, to insure that

contracting activities do not purchase the former instead of the

latter. The Committee is already working actively with one of the JWOD

Program's major Government customers to identify such commercial items.

Because these determinations must be made on a case by case basis, the

Committee does not believe that a specific definition of the concept is

possible. The Committee does believe that the JWOD Program and the

commercial items acquisition policy can coexist successfully, and that

this new concept will be a useful tool for assuring that this will

happen.

One commenter suggested that the phrase ``simplified acquisition

threshold'' be used instead of the figure ``$100,000'' as the limit for

central nonprofit agency issuance of purchase exceptions without

Committee approval stated in Sec. 51-5.4. The commenter noted that this

change would make the provision consistent with the new procurement

reform statute and would avoid the need for further changes in the

Committee's regulation if the threshold changed in the future. The

Committee has adopted this suggestion. As the proposed rule indicated,

the Committee's intent in changing the figure from $25,000 to $100,000

was to be consistent with this legislation.

One commenter noted that the policy of stocking military resale

commodities, which is set forth in Sec. 51-6.4, has been changed to

require exclusive stocking of commodities in the 800- as well as 900-

series. The Committee has revised the section accordingly.

One commenter requested clarification of the pricing of replacement

commodities as described in Sec. 51-6.13(a). The Committee has revised

the provision to make it clear that the fair market price is the one

set for the replacement commodity, not the price for the commodity

being replaced.

Another commenter objected to the substitution of the word

``recently'' for ``previously'' in the description of a replacement

commodity in Sec. 51-6.13(a) as one ``which has not been recently

procured.'' The commenter recommended the use of a specific period of

time in this context, such as ``one year.'' The Committee believes this

recommendation would make the provision unnecessarily restrictive,

particularly if a one-year limit were adopted, and would deny the

Committee the flexibility it needs to respond to individual

circumstances.

One commenter objected to the term ``other variations'' in new

Sec. 51-6.13(b), which extends Procurement List status to additional

sizes, colors, or other variations of a commodity on the Procurement

List if these similar commodities have not been recently procured.

Another commenter, on the other hand, applauded this additional size,

color, and variation terminology as clarifying the scope of what a

Procurement List commodity is.

Like the ``essentially the same'' concept discussed earlier in this

notice, the Committee considers the language in Sec. 51-6.13(b) which

the commenters have noted to be an important part of defining the scope

of a Procurement List commodity in the new Government procurement

environment. The term ``other variations'' is necessary to reach items

which are essentially the same as Procurement List commodities where

the difference cannot be defined in terms of size or color.

Consequently, deletion of the term from Sec. 51-6.13(b) would deny the

Committee the flexibility it needs to carry out its mission.

A commenter suggested that the Committee regulations should contain

a provision allowing contracting officers to terminate for default

nonprofit agencies which fail to perform as required, and/or to apply

liquidated damages in such instances. Because of the differences in the

JWOD Program from competitive contracting, particularly the statutory

mandatory source requirement, the Committee has long used an

alternative method of resolving contractor performance problems. This

method is set forth in Part 51-6 of the Committee's regulations, and

includes a dispute resolution procedure which involves the central

nonprofit agency concerned in situations which cannot be resolved

between the nonprofit agency and the contracting officer, with a right

of appeal to the Committee, as well as a purchase exception procedure

which affords the contracting activity relief from the mandatory source

requirement in cases where the nonprofit agency truly cannot meet the

Government's requirements. The Committee has also allowed price

reductions and other consideration in return for late deliveries, in

appropriate circumstances. In light of the existence of these

procedures, which have worked well over the years to minimize disputes

and speed their resolution, the Committee does not believe that the

approach suggested by the commenter would be an improvement, and it

would deny the Committee the flexibility it needs to make its program

run effectively.

Regulatory Flexibility Act

I certify that this revision of the Committee regulations will not

have a significant economic impact on a substantial number of small

entities because the revisions basically update and clarify program

policies and procedures and do not essentially change the impact of the

regulations on small entities.

Paperwork Reduction Act

The Paperwork Reduction Act does not apply to this regulatory

revision because it contains no information collection or recordkeeping

requirements as defined in that Act and its regulations.

Executive Order No. 12866

The Committee has been exempted from the regulatory review

requirements of the Executive Order by the Office of Information and

Regulatory Affairs. Additionally, this revision to the Committee's

regulations is not a significant regulatory action as defined in the

Executive Order.

List of Subjects

41 CFR Parts 51-2 Through 51-6

Government procurement, Handicapped, Organization and functions

(Government agencies), Reporting and recordkeeping requirements.

41 CFR Part 51-8

Freedom of information.

41 CFR Part 51-9

Privacy.

For the reasons set out in the preamble, parts 51-2 through 51-6,

51-8 and 51-9 of title 41, chapter 51 of the Code of Federal

Regulations are amended as follows:

1. The authority citation for parts 51-2 through 51-6 continues to

read as follows:

Authority: 41 U.S.C. 46-48C.

PART 51-2--COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR

SEVERELY DISABLED

2. Section 51-2.2 is amended by adding the following sentence at

the end of paragraph (b):

Sec. 51-2.2 Powers and responsibilities.

* * * * *

(b) * * * Authorize and deauthorize central nonprofit agencies and

nonprofit agencies to accept orders from contracting activities for the

furnishing of specific commodities and services on the Procurement

List.

* * * * *

3. Section 51-2.3 is revised to read as follows:

Sec. 51-2.3 Notice of proposed addition or deletion.

At least 30 days prior to the Committee's consideration of the

addition or deletion of a commodity or service to or from the

Procurement List, the Committee publishes a notice in the Federal

Register announcing the proposed addition or deletion and providing

interested persons an opportunity to submit written data or comments on

the proposal. Interested persons submitting comments in bound form

should also submit an unbound copy that is capable of being legibly

photocopied.

4. Section 51-2.4 is amended by removing paragraph (d),

redesignating the introductory text and paragraphs (a) through (c) as

paragraphs (a) through (a)(3), redesignating paragraphs (e) through

(e)(3) as paragraphs (a)(4) through (a)(4)(ii), revising the newly

redesignated paragraphs (a), introductory text, (a)(4) through

(a)(4)(ii), and adding paragraph (b) to read as follows:

Sec. 51-2.4 Determination of suitability.

(a) For a commodity or service to be suitable for addition to the

Procurement List, each of the following criteria must be satisfied:

* * * * *

(4) Level of impact on the current contractor for the commodity or

service. (i) In deciding whether or not a proposed addition to the

Procurement List is likely to have a severe adverse impact on the

current contractor for the specific commodity or service, the Committee

gives particular attention to:

(A) The possible impact on the contractor's total sales, including

the sales of affiliated companies and parent corporations. In addition,

the Committee considers the effects of previous Committee actions.

(B) Whether that contractor has been a continuous supplier to the

Government of the specific commodity or service proposed for addition

and is, therefore, more dependent on the income from such sales to the

Government.

(C) Any substantive comments received as the result of the notice

of the proposed addition in the Federal Register.

(ii) If there is not a current contract for the commodity or

service being proposed for addition to the Procurement List, the

Committee may consider the most recent contractor to furnish the item

to the Government as the current contractor for the purpose of

determining the level of impact.

(b) In determining the suitability of a commodity or service for

addition to the Procurement List, the Committee also considers other

information it deems pertinent, including comments on a proposal

published in the Federal Register to add the commodity or service to

the Procurement List and information submitted by Government personnel

and interested persons.

5. Section 51-2.5 is revised to read as follows:

Sec. 51-2.5 Committee decision.

The Committee considers the particular facts and circumstances in

each case in determining if a commodity or service is suitable for

addition to the Procurement List. When the Committee determines that a

proposed addition is likely to have a severe adverse impact on a

current contractor, it takes this fact into consideration in deciding

not to add the commodity or service to the Procurement List, or to add

only a portion of the Government requirement for the item. If the

Committee decides to add a commodity or service in whole or in part to

the Procurement List, that decision is announced in the Federal

Register with a notice that includes information on the effective date

of the addition.

6. Section 51-2.6 is amended by redesignating the current text of

the section as paragraph (a) and adding paragraph (b) to read as

follows:

Sec. 51-2.6 Reconsideration of Committee decision.

(a) * * *

(b) In reconsidering its decision, the Committee will balance the

harm to the party requesting reconsideration if the item remains on the

Procurement List against the harm which the nonprofit agency or its

employees who are blind or have other severe disabilities would suffer

if the item were deleted from the Procurement List. The Committee may

also consider information bringing into question its conclusions on the

suitability criteria on which it based its original decision as factors

weighing toward a decision to delete the item, and information

concerning possible harm to the Government and the JWOD Program as

factors weighing toward confirmation of the original decision.

7. Section 51-2.7 is revised to read as follows:

Sec. 51-2.7 Fair market price.

The Committee is responsible for determining the fair market

prices, and changes thereto, for commodities and services on the

Procurement List. The Committee establishes the initial fair market

price at the time a commodity or service is added to the Procurement

List. In cases where initial prices are not based on competitive bids,

the Committee considers recommendations from contracting activities and

the central nonprofit agency concerned. Prices are revised in

accordance with changing market conditions as reflected primarily by

economic indices and changes in nonprofit agency costs, as provided in

Committee pricing procedures. Recommendations for fair market prices or

changes thereto shall be submitted by the nonprofit agencies to the

appropriate central nonprofit agency. The central nonprofit agency

shall analyze the data and submit a recommended fair market price to

the Committee accompanied by the information required by the

Committee's pricing procedures to support the recommended price.

PART 51-3--CENTRAL NONPROFIT AGENCIES

8. Section 51-3.2 is amended by revising paragraph (d),

redesignating paragraphs (e) through (m) as paragraphs (f) through (n),

and adding a new paragraph (e) to read as follows:

Sec. 51-3.2 Responsibilities under the JWOD Program.

* * * * *

(d) Recommend to the Committee, with the supporting information

required by Committee procedures, suitable commodities or services for

procurement from its nonprofit agencies.

(e) Recommend to the Committee, with the supporting information

required by Committee procedures, initial fair market prices for

commodities or services proposed for addition to the Procurement List.

* * * * *

9. Section 51-3.3 is revised to read as follows:

Sec. 51-3.3 Assignment of commodity or service.

(a) The central nonprofit agencies shall determine by mutual

agreement the assignment to one of them of a commodity or service for

the purpose of evaluating its potential for possible future addition to

the Procurement List, except that the Committee shall initially assign

a commodity to National Industries for the Blind when NISH has

expressed an interest in the commodity and National Industries for the

Blind has exercised the blind priority.

(b) NISH shall provide National Industries for the Blind with

procurement information necessary for a decision to exercise or waive

the blind priority when it requests a decision. National Industries for

the Blind shall normally notify NISH of its decision within 30 days,

but not later than 60 days after receipt of the procurement

information, unless the two central nonprofit agencies agree to an

extension of time for the decision. Disagreements on extensions shall

be referred to the Committee for resolution.

(c) If National Industries for the Blind exercises the blind

priority for a commodity, it shall immediately notify the Committee and

NISH and shall submit to the Committee a proposal to add the commodity

to the Procurement List within nine months of the notification, unless

the Committee extends the assignment period because of delays beyond

the control of National Industries for the Blind. Upon expiration of

the assignment period, the Committee shall reassign the commodity to

NISH.

(d) The central nonprofit agency assigned a commodity shall obtain

a decision from Federal Prison Industries on the exercise or waiver of

its priority and shall submit the procurement information required by

Federal Prison Industries when it requests the decision. Federal Prison

Industries shall normally notify the central nonprofit agency of its

decision within 30 days, but not later than 60 days after receipt of

the procurement information, unless it agrees with the central

nonprofit agency on an extension of time for the decision. The central

nonprofit agency shall refer a disagreement over an extension to the

Committee for resolution with Federal Prison Industries.

(e) The central nonprofit agency shall provide the Committee the

decision of Federal Prison Industries on the waiver or exercise of its

priority when it requests the addition of the commodity to the

Procurement List. NISH shall also provide the decision of National

Industries for the Blind waiving its priority.

PART 51-4--NONPROFIT AGENCIES

10. Section 51-4.2 is amended by revising paragraph (a)(1)

introductory text, and (a)(2) introductory text, to read as follows:

Sec. 51-4.2 Initial qualification.

(a) * * *

(1) A privately incorporated nonprofit agency shall submit to the

Committee through its central nonprofit agency the following documents,

transmitted by a letter signed by an officer of the corporation or

chief executive:

* * * * *

(2) A State-owned or State-operated nonprofit agency, or a

nonprofit agency established or authorized by a State statute other

than the State corporation laws and not privately incorporated, shall

submit to the Committee through its central nonprofit agency the

following documents, transmitted by a letter signed by an officer of

the wholly-owned State corporation or an official of the agency that

directs the operations of the nonprofit agency, as applicable:

* * * * *

11. Section 51-4.3 is amended by revising paragraphs (b)(6) and

(c)(1) to read as follows:

Sec. 51-4.3 Maintaining qualification.

* * * * *

(b) * * *

(6) Maintain a file on each blind individual performing direct

labor which contains a written report reflecting visual acuity and

field of vision of each eye, with best correction, signed by a person

licensed to make such an evaluation, or a State certification of

blindness.

* * * * *

(c) * * *

(1) A written report signed by a licensed physician, psychiatrist,

or qualified psychologist, reflecting the nature and extent of the

disability or disabilities that cause such person to qualify as a

person with a severe disability, or a State certification listing the

disability or disabilities.

* * * * *

12. Section 51-4.5 is amended by revising the section heading to

read as follows:

Sec. 51-4.5 Violations by nonprofit agencies.

* * * * *

PART 51-5--CONTRACTING REQUIREMENTS

13. Section 51-5.2 is amended by revising the section heading and

paragraph (a) and adding a second sentence to paragraph (e) to read as

follows:

Sec. 51-5.2 Mandatory source requirement.

(a) Nonprofit agencies designated by the Committee are mandatory

sources of supply for all entities of the Government for commodities

and services included on the Procurement List, as provided in Sec. 51-

1.2 of this chapter.

* * * * *

(e) * * * This requirement applies both to contracting activities

and to other persons providing such commodities to them by contract.

* * * * *

14. Section 51-5.3 is amended by revising the first sentence of

paragraph (a) and adding paragraph (c) to read as follows:

Sec. 51-5.3 Scope of requirement.

(a) When a commodity is included on the Procurement List, the

mandatory source requirement covers the National Stock Number or item

designation listed and commodities that are essentially the same as the

listed item. * * *

* * * * *

(c) When a commodity or service is added to the Procurement List,

the addition does not affect contracts for the commodity or service

awarded prior to the effective date of the Procurement List addition or

options exercised under those contracts.

15. Section 51-5.4 is amended by revising paragraph (d) and the

second sentence of paragraph (f)(1) to read as follows:

Sec. 51-5.4 Purchase exceptions.

* * * * *

(d) The central nonprofit agency shall obtain the approval of the

Committee before granting a purchase exception when the value of the

procurement exceeds the simplified acquisition threshold set forth in

the Federal Acquisition Streamlining Act of 1994 or any subsequent

amendments thereto.

* * * * *

(f)* * *

(1)* * * The deadline may be extended by the central nonprofit

agency with, in cases of procurements exceeding the simplified

acquisition threshold, the concurrence of the Committee.

* * * * *

16. Section 51-5.5 is amended by revising paragraph (b) to read as

follows:

Sec. 51-5.5 Prices.

* * * * *

(b) Prices for commodities include applicable packaging, packing,

and marking. Prices include transportation to point of delivery as

specified in Sec. 51-5.6.

* * * * *

17. Section 51-5.6 is revised to read as follows:

Sec. 51-5.6 Shipping.

(a) Except as provided in paragraph (c) of this section for

commodities other than military resale commodities, delivery is

accomplished when a shipment is placed aboard the vehicle of the

initial carrier. Time of delivery is when the shipment is released to

and accepted by the initial carrier.

(b) Method of transportation to destination shall normally be by

Government bills of lading although the contracting activity may

designate another method of transportation on its order, in accordance

with Committee procedures. Government bills of lading may accompany

orders or be otherwise furnished, but shall be supplied promptly. If

the contracting activity fails to designate a method of transportation

or furnish a Government bill of lading promptly, it shall constitute an

excusable cause for delay in delivery.

(c) The Committee may determine that for certain commodity orders,

delivery is accomplished when the shipment is delivered to the

purchaser's facility (plant, warehouse, store, lot, or other location

to which shipment can be made). Time of delivery for these orders is

when the shipment is released by the carrier and accepted by the

purchaser. Under this method of transportation, the nonprofit agency

will normally ship by commercial bills of lading and will be

responsible for any loss or damage to the goods occurring before

receipt of the shipment at the delivery point specified. The nonprofit

agency will prepare and distribute commercial bills of lading, furnish

a delivery schedule and designate the mode of delivering carrier, and

pay all charges to the specified point of delivery.

Sec. 51-5.8 Violations by entities of the Government.

* * * * *

18. Section 51-5.8 is amended by revising the section heading to

read as set forth above.

PART 51-6--PROCUREMENT PROCEDURES

19. Section 51-6.2 is amended by revising the second sentence in

paragraph (f) to read as follows:

Sec. 51-6.2 Allocation process.

* * * * *

(f)* * * When a request for allocation provides a delivery schedule

(based on established lead times and time required for processing the

allocation request) which cannot be met, the central nonprofit agency

shall request a revision, which the contracting activity shall grant,

if feasible, or the central nonprofit agency shall issue a purchase

exception authorizing procurement from commercial sources as provided

in Sec. 51-5.4 of this chapter.

* * * * *

20. Section 51-6.4 is amended by revising paragraphs (a), (b),

(c)(3), (c)(4), and (d), and the second sentence of paragraph (e) to

read as follows:

Sec. 51-6.4 Military resale commodities.

(a) Purchase procedures for ordering military resale commodities

are available from the central nonprofit agencies. Authorized resale

outlets (military commissary stores, Armed Forces exchanges and like

activities of other Government departments and agencies) shall request

the central nonprofit agency responsible for the military resale

commodity being ordered to designate the nonprofit agency or its agent

to which the outlets shall forward orders.

(b) Authorized resale outlets shall stock military resale

commodities in as broad a range as practicable. Authorized resale

outlets may stock commercial items comparable to the military resale

commodities they stock, except that military commissary stores shall

stock military resale commodities in the 800- and 900-series

exclusively, unless an exception has been granted on an individual

store basis for the stocking of comparable commercial items for which

there is a significant customer demand.

(c) * * *

(3) Issue guidance requiring commissary store personnel to maximize

sales potential of military resale commodities.

(4) Establish policies and procedures which reserve to its agency

headquarters the authority to grant exceptions to the exclusive

stocking of 800- and 900-series military resale commodities.

(d) The Defense Commissary Agency shall provide the Committee a

copy of each directive which relates to the stocking of military resale

commodities in commissary stores, including exceptions authorizing the

stocking of commercial items in competition with 800- and 900-series

military resale commodities.

(e) * * * Zone pricing is used for delivery to Alaska and Hawaii.

21. Section 51-6.8 is amended by adding paragraph (e) to read as

follows:

Sec. 51-6.8 Deletion of items from the Procurement List.

* * * * *

(e) The Committee may delete an item from the Procurement List

without a request from a central nonprofit agency if the Committee

determines that none of the nonprofit agencies participating in the

JWOD Program are capable and desirous of furnishing the commodity or

service to the Government, or if the Committee decides that the

commodity or service is no longer suitable for procurement from

nonprofit agencies employing people who are blind or have other severe

disabilities. In considering such an action, the Committee will consult

with the appropriate central nonprofit agency, the nonprofit agency or

agencies involved, and the contracting activity.

22. Section 51-6.12 is amended by revising paragraphs (a), (c), and

(d) and adding paragraph (e) to read as follows:

Sec. 51-6.12 Specification changes and similar actions.

(a) Contracting activities shall notify the nonprofit agency or

agencies authorized to furnish a commodity on the Procurement List and

the central nonprofit agency concerned of any changes to the

specification or other description of the commodity.

* * * * *

(c) For services on the Procurement List, the contracting activity

shall notify the nonprofit agency furnishing the service and the

central nonprofit agency concerned at least 90 days prior to the date

that any changes in the statement of work or other conditions of

performance will be required.

(d) If an emergency makes it impossible for a contracting activity

to give the 90-day notice required by paragraphs (b) and (c) of this

section, the contracting activity shall inform the nonprofit agency and

the central nonprofit agency concerned of the reasons it cannot meet

the 90-day notice requirement when it places the order or change

notice.

(e) Nonprofit agencies shall recommend changes in specifications,

item descriptions, and statements of work that will improve the

commodity or service being provided, reduce costs, or improve overall

value to the Government. Contracting activities shall respond promptly

to these recommendations and work with the nonprofit agencies to

implement them when appropriate.

23. Section 51-6.13 is revised to read as follows:

Sec. 51-6.13 Replacement and similar commodities.

(a) When a commodity on the Procurement List is replaced by another

commodity which has not been recently procured, and a nonprofit agency

can furnish the replacement commodity in accordance with the

Government's quality standards and delivery schedules, the replacement

commodity is automatically considered to be on the Procurement List and

shall be procured from the nonprofit agency designated by the Committee

at the fair market price the Committee has set for the replacement

commodity. The commodity being replaced shall continue to be included

on the Procurement List until there is no longer a Government

requirement for that commodity.

(b) If contracting activities desire to procure additional sizes,

colors, or other variations of a commodity after the commodity is added

to the Procurement List, and these similar commodities have not

recently been procured, these commodities are also automatically

considered to be on the Procurement List.

(c) In accordance with Sec. 51-5.3 of this chapter, contracting

activities are not permitted to purchase commercial items that are

essentially the same as commodities on the Procurement List.

PART 51-8--PUBLIC AVAILABILITY OF AGENCY MATERIALS

24. The authority citation for Part 51-8 continues to read as

follows:

Authority: 5 U.S.C. 552.

25. Section 51-8.1 is revised to read as follows:

Sec. 51-8.1 Purpose.

These regulations implement the provisions of the ``Freedom of

Information Act,'' 5 U.S.C. 552. They establish procedures under which

the public may inspect and obtain copies of material maintained by the

Committee, provide for administrative appeal of initial determinations

to deny requests for material, and prescribe fees to be charged by the

Committee to recover search, review, and duplication costs.

26. Section 51-8.3 is amended by revising the introductory text of

the section, removing paragraph (b), redesignating paragraphs (c)

through (i) as paragraphs (b) through (h), and revising newly

redesignated paragraph (b), to read as follows:

Sec. 51-8.3 Definitions.

As used in this part:

(a) * * *

(b) The term Chairperson means the Chairperson of the Committee for

Purchase From People Who Are Blind or Severely Disabled.

* * * * *

27. Section 51-8.4 is revised to read as follows:

Sec. 51-8.4 Availability of materials.

Material described in 5 U.S.C. 552(a)(2) shall be available for

inspection during normal business hours at the Committee's offices,

Crystal Square 3, Suite 403, 1735 Jefferson Davis Highway, Arlington,

Virginia 22202-3461. An individual who intends to visit the Committee

offices to inspect this material shall make an appointment with the

Executive Director at least one week in advance, except when the

Committee has provided notification to the individual that the material

is available for inspection in the Committee offices, in which case an

appointment must be made at least 24 hours in advance.

28. Section 51-8.5 is amended by revising the first sentence in

paragraph (a) to read as follows:

Sec. 51-8.5 Requests for records.

(a) Requests to obtain copies of any material maintained by the

Committee must be submitted in writing to the Executive Director at the

Committee's offices, Crystal Square 3, Suite 403, 1735 Jefferson Davis

Highway, Arlington, Virginia 22202-3461. * * *

* * * * *

Sec. 51-8.7 [Amended]

29. Section 51-8.7 is amended by removing ``Chairman'' where it

appears in paragraph (e) and replacing it with ``Chairperson.''

Sec. 51-8.10 [Amended]

30. Section 51-8.10 is amended by removing ``Chairman'' where it

appears in paragraphs (a), (b), (c), and (d) and replacing it with

``Chairperson'' in each place it occurs.

Sec. 51-8.11 [Amended]

31. Section 51-8.11 is amended by removing ``Chairman'' where it

appears in paragraph (a) and replacing it with ``Chairperson.'' 32.

Section 51-8.14 is amended by revising paragraph (c) to read as

follows:

Sec. 51-8.14 Fee waivers and reductions.

* * * * *

(c) Fees shall be waived in all circumstances where the amount of

the fee is $10 or less as the cost of collection would be greater than

the fee. This minimum shall be applied separately to each Committee

response when it is necessary for the Committee to make more than one

response to a request for records.

PART 51-9--PRIVACY ACT RULES

33. The authority citation for Part 51-9 is revised to read as

follows:

Authority: 5 U.S.C. 552a.

Sec. 51-9.405 [Amended]

34. Section 51-9.405 is amended by removing ``Chairman'' wherever

it appears in each paragraph of the section and replacing it with

``Chairperson'' in each place it occurs.

Dated: November 9, 1994.

Beverly L. Milkman,

Executive Director.

[FR Doc. 94-28191 Filed 11-15-94; 8:45 am]

BILLING CODE 6820-33-P